It’s Time to Tighten Your Financial Belt

By Madeline Cheney

The economic impact of COVID-19 continues to be felt around the world. This April, the unemployment rate increased by over 10%, causing significant financial hardship to millions across the country. Coupled with the fact that 69% of Americans have less than $1,000 in a savings account – despite savings accounts being the preferred way to save money – the rapid unemployment spike is a significant cause for concern.

Though many areas are lessening restrictions and businesses are beginning to open – bringing into sight signs of normalcy – the economy will not return to normal so quickly. If there is a silver lining to what we have been experiencing over the last several months, perhaps it has been a wakeup call highlighting the need to have adequate personal savings in the event of an emergency. Typically, experts suggest having three months up to a full year’s worth of expenses saved.

So how can Americans safeguard themselves against financial difficulties like this in the future? You may think the easiest answer is to earn more to save more, but especially at a time like this, that possibility is reduced. The best option is simply to tighten your belt. Limiting spending can seem impossible, but living not just within but below your means, will allow you to save and prepare for financial disaster. Having savings during a time of economic crisis can make all the difference.

Here are a few simple ways to tighten your belt:

• Make savings a part of your budget.
• Never buy items on impulse, especially a major purchase! Make yourself wait a week or even a month before you go through with a big purchase.
• Look for deals on items you need. However, don’t just buy an item because it is on sale or you have a coupon. If you weren’t going to purchase that item anyway, you wouldn’t actually save money.
• Take inventory of your credit card statement and find out where you can cut back.
• Leave your credit card at home. Having your credit card with you only makes it easier to impulse buy and exceed your budget.

The CFO of Med One Group, Jeff Easton, recently shared some apt advice regarding increasing personal savings. Easton says,

““Now is as good a time as any to tighten your belt financially. Many of us are looking for the perfect time to tighten our belts financially, just as many times we have waited for the perfect time to tighten our belts physically. Just as with the physical belt-tightening, there is no perfect time. We just have to do it; we just have to decide to make the choice. Now is the time to tighten our belts financially – you can do it.”

Following this sage advice, along with other sound financial practices, will pay dividends in the financial security you create for yourself and the peace of mind that follows your preparation.

Sources
www.bls.gov